Log contracts negotiated 'under urgency'

Crunch time looms for the 400 staff of ailing Southern Cross Forest Products, as crucial log supply contracts are negotiated ''under urgency'' with receivers KordaMentha.

Without immediate and ongoing log contracts in place, Southern Cross' viability for sale as a going concern is undermined; having been placed in receivership 13 days ago, by ANZ, carrying $58 million in debt.

Amalgamated Workers Union spokesman Calvin Fisher, representing the majority of staff, called on Dunedin City Council-owned City Forests to throw Southern Cross a lifeline, and renew, and enlarge, its log supply contract.

''This situation is coming down to the wire ... City Forests, as a council-owned company, has a `duty of care' here.

''More than 400 local jobs are at stake and hundreds others in related cartage and forestry crews,'' he said.

''It's all very well for the council to be concerned over Invermay, [proposed 75 science job losses] but we've lost hundreds of blue-collar jobs recently,'' he said of widespread losses in the print, manufacturing and mining sectors.

New Zealand's sawmillers are struggling to match the high price China is paying for logs, and facing log shortages for the same reason, which slashes the profit margins for their sawn timber.

City Forests chief executive Grant Dodson said his company - after corporate forest owners Wenita Forest Products Ltd and Rayonier Asia Pacific Ltd - was a ''significant second-tier'' Southern Cross supplier.

''We're working through a supply arrangement with the receivers as a matter of urgency,'' Mr Dodson said.

He ruled out City Forests being in a position to boost the size of its supply contract, as suggested by Mr Fisher.

City Forests had contract commitments to other domestic sawmillers, exporting arrangements and also operational constraints, but had months ago programmed to supply Southern Cross with a larger than usual supply contract with a new block being cut.

Mr Dodson said to keep Southern Cross operational, ''other corporates [major forest owners] would have to play their part, too'' in coming to new supply agreements with Southern Cross' receivers.

''We hope we can come to satisfactory arrangement and can resume [log] supply as soon as practicable,'' Mr Dodson said.

Wenita chief executive David Cormack said the company had already reached an agreement with receivers KordaMentha a week ago, and had resumed log supplies at similar volumes, prior to the receivership.

''As Southern Cross' [historic] principal supplier, we're doing all we can'' to supply logs, Mr Cormack said.

He declined to reveal the terms of the log supply deal and said Wenita was still in discussion with KordaMentha over ''various issues'', to do with the receivership.

Rayonier's regional manager for Otago and Southland, Steve Chandler, said the company was negotiating with KordaMentha to resume log contracts ''as soon as practicable, hopefully in the next few weeks''.

He said Rayonier had been a ''significant'' supplier and of a ''similar size'' by volume as Wenita.

-simon.hartley@odt.co.nz

ODT/directory - Local Businesses

CompanyLocationBusiness Type
Jackson OrchardsCromwellOrchards
Opoho SchoolDunedinSchools
SANZA Global TransportDunedinAccommodation & Travel
Golden InsulationDunedin